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Hotel distribution: Swimming the channels

Fragmented distribution makes hotel booking compliance a challenge, but there are ways to get your ducks in a row…

Traditionally, the way to book hotel accommodation was through the global distribution systems (GDSs), but now fragmentation rules: online travel agencies (OTAs), independent properties not on the GDSs, hotel booking agencies, disruptors, corporate and TMCs’ negotiated rates are all in the mix. In addition, tools such as Concur’s Triplink supposedly catch all purchases, compliant or otherwise, while travel management company platforms, such as CWT’s new Roomit, also embrace pretty much everything. Then there is the need for buyers to audit negotiated rates. How on earth can travel buyers possibly implement policy and monitor their programme in such a disparate – not to say desperate – environment?

But is it all it appears? Jef Robinson is a senior travel buyer for a major US software firm. He says: “This is a general trend within business travel, and disruptors are given significant media coverage. However, data suggests that GDS bookings are on the increase with a growth of 2 million bookings forecast over volume for 2016.”

Hotel product manager for FCM, Rachel Newns, agrees. She also thinks GDS covers many of the available options. “We still find that GDS reservations fulfil most requirements for travellers and tend to be the preferred options for travel managers, because they give access to a company’s negotiated rates, best available rate, FCM/Flight Centre negotiated rates, and we can give loyalty programme rates to those – all in GDS,” she says. “It is all available through one platform with multiple payment options; it is trackable, traceable, so it helps with compliance, traveller safety and security; and it has all the benefits of policy in the tool as well.”

Navigating choppy seasThe key to successfully navigating these choppy seas is a well-defined, well-communicated travel policy. Some companies incorporate the travel policy with their expense policy and make it part of credit card induction, but the vast majority have a booking tool that’s configured with the organisation’s travel policy.

There is, however, a more pragmatic view. “Fragmentation and travellers going out of channel are the reality of the time we live in,” says Roberto Scolaris at Concur. “Buyers can fight it or they can leverage it. They can ask, why is this traveller going rogue? Will this benefit other travellers, will it lead them to perform better? Should I replicate this – or police it?”

This is where Concur Triplink comes in: “We did not want Triplink to be seen as allowing employees to do what they want. We wanted to use it as a compliance tool,” he says. “It integrates directly with suppliers or when the user receives an itinerary, they can forward that to Concur and that way all data is incorporated into corporate systems.”

CWT’s Roomit lists CWT’s and corporates’ negotiated rates, those of the two biggest OTAs, retail rates and more. The TMC takes the view that whether or not the travel manager wants travellers seeing that content is immaterial because travellers going out of channel are demanding it by their behaviour; and at least anyone using Roomit is within the secure environment of CWT.

Direct connect is another problem for buyers, with some budget hotels and the likes of Airbnb accepting bookings only via their websites. Some chains also try to seduce travellers with better deals if they book direct and online. Global accommodation manager for AIG Jan Jacobsen has in its programme homeshare operators such as Onefinestay, which is part of Accor; Oasis, part of Hyatt; and Veeve, part of Wyndham. Being part of hotel groups means “they offer quality control at a different level,” he says.

The average corporate hotel programme gets around 60 per cent compliance, often against 80 per cent plus for air and rail. “If anything is going to mess up your managed travel programme, it will be hotels,” says Robert Daykin, director of consultancy and outsourced travel management specialist Corporate Travel Partners. “For some reason, people who travel seem to have a different approach to hotels than to air or rail.”

This is partly because of the number of influential factors, from location and standards, to which systems properties are on and whether there is a corporate deal – which also depends on a number of considerations, explains Daykin: “Is it worth having a deal or is it worth just buying spot in the market from a range of hotels with the right location, convenience, standards of service and accommodation?”

Factor in an ever-increasing number of ‘millennials’ in corporate life, in whose DNA is the ease of doing anything, anywhere with technology, and booking hotel accommodation looks like a free-for-all. “They think of booking a hotel as one click away,” says Douglas Green, UK&I managing director at HRS. “Most travel programmes are not providing anything travellers want – the depth and breadth of content can be an issue; 76 per cent of business hotels are independent in Europe and other markets, so there is more variety and people are going outside their programme. As a result, it is very difficult for travel buyers to reach their objective.”

Buyer Robinson also notes the high volume of independent hotels in EMEA and APAC. “That has compromised global travel programmes and impacted the opportunity to leverage volume with the large chains favoured in the US,” he says. “Many offices throughout the regions aren’t adequately covered by anything other than independents. Noticeably though, more independents are operating via GDS, providing more choice but perhaps at an increase in price.

“Ultimately, the choice of accommodation is down to the individual traveller, as long as the price is within budget and bookings are made via our TMC. This provides our security team with adequate detail to cover the vital duty of care, traveller tracking and spend visibility, permitting future rate and concession negotiations,” says Robinson.

Maintaining prioritiesAn ACTE/HRS survey of travel managers showed that duty-of-care is top priority to 94 per cent of respondents, followed by cost reduction. But if only 60 per cent of hotel bookings are compliant, that drives a coach and horses through any buyer’s priorities.

“Travel managers have an increasingly complex task,” says Green. “They are getting solutions from suppliers and there is pressure internally to keep travellers happy – and that is a key measurement. Travellers have much more of a voice, so it is very important to be using the latest technology. Online booking tools help keep control and are convenient for them.”

Enter the end-to-end solution: “It helps to have expertise at the beginning, when you are sourcing, so you are selecting the right hotels, negotiating the right pricing and you are able to bundle groups of hotels and locations,” he says. “It’s often done in-house – it’s a critical part of providing a full solution.”

It is also vital to audit rates, something that travel buyers tend to outsource because it is such a labour-intensive task. Ideally, this is done immediately after a contract has been awarded to weed out mistakes and then checked regularly to ensure they have not dropped out nor been amended by providers.

“Why go to the trouble – and cost – of negotiating rates, if they’re not audited for accuracy?” says Robinson. “Any organisation should be sure what they agree with hotels is reviewed. If not, then it’s entirely possible that the annual hotel RFPs are effectively a paperwork exercise offering little tangible benefit. The flip side would be not to negotiate rates and simply accept best available rate at the time of booking.”

Ultimately, a TMC and self-booking tools combine to help travel managers keep control of their programme and track of their travellers. This does not necessarily mean ring-fencing content to the point that, although negotiated rates are protected, the traveller is dissatisfied with the choice.

“Our role as a TMC is to provide travellers and corporations with access to content that not only meets their needs but ensures traveller safety,” says Pauline Houston, senior director at American Express GBT. “Non-GDS content is growing, but it is still the smaller part of most corporations’ accommodation requirements.

“Travel managers want to control costs, ensure travellers’ safety and comfort, and obtaining data helps them to optimise programmes, pricing and policies. It’s important to understand why a traveller is booking out of policy – is it location, price or experience? This can guide and influence policy decisions.”

Travel managers still have many ways to control their programme – it just requires some creativity.

Case study: Travel buyer, aerospace manufacturerWe have a preferred hotel programme for 700 properties worldwide, mostly in Europe, and we do the RFP through Lanyon. We do a two-year programme and are looking at other options for the next one, which starts in the middle of 2018 – we might involve the TMC more, a third party or maybe not have a preferred programme at all. We are looking at all the possibilities.

With some of the main chains, we have a global discount. We also use hotel booking agency HRS, so when travellers look at the online booking tool, it shows the GDS and HRS rates; and there is also the option for them to phone the TMC to get the same rate.

One reason we use GDS and HRS is to cover both major chains and independent properties and the rates are sometimes different; we can find that HRS rates are better. It is confusing because a hotel can show twice in the booking tool and a traveller will ask why, especially if the rate is the same.

The tool is configured so that the lowest rate comes up first – partly by rate, but if you are staying at Charles de Gaulle Airport, it won’t show hotels in the middle of the city even if there is a cheaper hotel there and a more expensive one at the airport. It will show the cheapest preferred hotel first.

We have created a programme called Hotel Attachment. We measure how many travellers book a hotel at the same time as the flight. It used to be around 60 per cent and now it’s 80 per cent – that is one of our measures of compliance, so we know where they are, but that does not necessarily mean they are booking a preferred hotel.

This rate has gone up over 18 months because we have communicated to travellers what they should be doing and put controls on their expenses: if they are claiming a hotel cost that wasn’t booked through our process, it will be paid but it will be questioned.

Our TMC is ensuring travellers are aware they should be booking hotels through the online booking tool; and when they book a flight using the tool, it automatically tells them they then need to book a hotel because they are staying one night or more.

They could book through our programme in a city where we have no preferred hotels. In Leeds, for example, they could book pretty much any hotel from £50 to £120 and that would fall into the 80 per cent. We have a city cap of £120 for the UK. If they booked £180, they must explain why.

Many of our travellers – the other 20 per cent – are booking directly with hotels, possibly because the properties have offers for booking direct. Also, many always stay in the same place and when a city is sold out, they can get a room if they know the general manager and phone the hotel direct. Included in the 20 per cent are those going to conferences – if the hotel is included in the conference fee, it would not go through our process.